Should the State Give ‘Basic Universal Income’

Basic universal income is the idea of the state giving unconditional, significant and regular income to its citizens. It is a socialist idea, you can’t get away from that. But the question is whether it is a good thing. I think there are both good economic and social reasons for a basic income.

It worth starting with a brief comparison on social and economic realms of thought. I understand that the economy is important, and having a strong economy as a base helps a country to afford certain freedoms for its people. However, in developed countries where there is already a strong economic base, I do think the social realm trumps economic concerns.

Productivity per hour worked in the UK is low, compared to other developed nations. The UK’s productivity per hour is 18% behind the G7 average and at least 30% behind Germany, France and the Spain (Elliott, 2016). Even if you correct for the UK’s increased working hours compared to other countries, the UK is 10-20% less productive that France and Germany per worker (instead of ‘per hour’, which is the other statistic) (Van Reenen, 2015). There are many reasons for this productivity gap, the UK’s poor education, culture of bad management and lack of investment in technology are all partly to blame (Bloom, 2015); poor infrastructure (Heath, 2015) and the UK’s poor internet speeds (Jackson, 2016) are all in the firing line. As everyone with a keyboard seems to be entitled to an input here, I’d like to add mine: anxiety and stress is high in the UK (Mental Health Foundation, 2015), probably related to the increased number of hours worked, and people suffering from stress and anxiety simply perform worse (Owens et al., 2014).

I probably don’t have to cite sources from claiming anxiety lowers mental bandwidth, problem solving ability and cognitive performance (although, I did ― that’s Owens et al). You have probably felt yourself not function properly when stressed, or seen someone close to you lose their normal product selves to stress. My point here, though, is that a Universal Basic Income will alleviate some of that stress: worrying about having enough income for rent and food is a cause of stress which will lower productivity. Giving citizens less to worry about will help in calming many people down, leading to a more productive national work force. A more productive workforce makes more money for themselves, which is then taxed, and more money for the business, which is then taxed.

Another economic advantage to the Universal Basic Income is that it allows people to break certain employment and benefit traps. These traps are where a person doesn’t want to take a risk and search for a more fulfilling job, because the risk is quitting one job without landing the fulfilling one soon enough. A Universal Basic Income is a cushion that encourages people to take those risks, and the result is people getting out of the low-paid jobs that don’t want and into higher paid jobs that they do want. Related to this is the poverty trap, where a poor person is forced into a poor neighbourhood with poor job opportunities; the result is a spiraling self-enforcement of poverty. Turning all these people into economic actors, or higher-level economic actors, benefits the economy in increased tax.

All this economic talk frames obstacles to career progression and mental health issues as if their only value is to economic concerns. I do, however, disagree with that. The stresses of financial concerns are hitting people pretty hard (Quinn, 2016), and I’d weigh in my moral concerns by saying that this needs addressing even if no economic benefit could be articulated. One would think, and should be able to expect, that the physical and mental health of the citizens of a country are the priority of a government; not economics at the cost of all else. Universal Basic Income is, again, a solution.

There is the argument that this is socialism, and therefore shouldn’t happen. Firstly, that isn’t true; socialism is when the people own industry and production. This idea that distributing wealth is socialist is a weird invention. Secondly, even if we take ‘when the state funds something for public interest’ as the definition of socialist, this doesn’t follow. Thirdly, under this definition, there is a lot of socialism: healthcare, commonly pooled police and fire services, state pensions and infrastructure like roads. This new definition of socialism isn’t a bad thing. Compare it to the other end of the spectrum, free market economics, and you see wealth get concentrated into increasingly few places; it’s like a national game of Monopoly. Putting social interests at the heart of some policies and laws is not a bad thing.

It is possible to imagine other solutions to these problems. Stress and employment traps will have other solutions. And that is a conversation worth having. But I think the case for a Universal Basic Income is quite strong.

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43 thoughts on “Should the State Give ‘Basic Universal Income’”

I tend to favor such things but I also believe that the plutoctrats will figure out a way to make money out of that. In this country, waiters and waitresses who get tips/gratuities are not trusted to declare them on their tax returns. What there is is a special “minimum wage” for those servers. While others make $7-$15 per hour, restaurant workers make a min wage of $2 and change. These are not exactly people “rolling in dough” which is why we need to abuse them with the tax laws. Hedge fund managers, now there’s a class of people to protect!

On Wed, May 3, 2017 at 12:59 PM, Allallt in discussion wrote:

> Allallt posted: “Basic universal income is the idea of the state giving > unconditional, significant and regular income to its citizens. It is a > socialist idea, you can’t get away from that. But the question is whether > it is a good thing. I think there are both good economi” >

First of all, poor people are not poor because they don’t have enough money. They are poor because they have bypassed the opportunities they have had to maximize their income, and because they don’t effectively use what money they have acquired. So if you give them a “BUI”, a very large percentage of them will be no better off than they were before, and some might be worse (pushed into a higher tax bracket or qualified for an even more crippling credit line).

Second of all, giving people something (other than what is obviously a thoughtful gift) tends to not be appreciated, and worse, becomes thought of as an “entitlement” followed shortly by “not enough”.

Third, if you give someone an income with no strings attached, a lot of people won’t make any effort to better their situation or their society.

But ok, let us ignore the possible negative effects on a large percentage of the population and concentrate on the few to whom it would make a real difference.

Where then does the money to give this to “everyone” to truly benefit a few come from? Um, taxes on the people who have maximized their income and used their resources wisely, of course. Let me suggest that if you take away most of the reward for doing well, people will stop doing well. And if much less is paid in, and much more is paid out, how is that likely to end up?

Facts of life:

1) There is no problem which can be solved by throwing money at it.

2) Throwing money at a problem often makes it worse.

3) A solution which feels good almost always does more global harm than specific good.

Is it honestly your conception of wealth that everyone is born with equal opportunity and so differences in wealth are solely explained by life choices?
The fact that Trump was born a millionaire and given a million dollar loan and inherited a company and brand is, in in fact — in your eyes — an equal opportunity to how you and I entered the world? Or how a person born on a caravan site (trailer park) entered the world?

Of course everybody is born with differing situations, some born into poverty, some into wealth. Some with high intelligence, some with low. Some raised with love and attention, others not. Most have some particular talent.

So yes, “wealth” can be significantly influenced by each person’s unique circumstances. However, most people control their life status by the choices they make. You could have Donald Smith and Daffy Smith, twins born to real wealth, and Donald could make “good” choices and become even more wealthy, and Daffy could make “bad” choices and end up broke and cut off from the family. Conversely you could have twins Micky Jones and Minnie Jones born into abject poverty, with Micky making “bad” choices and staying at that level until he dies, while Minnie makes the best choices available to her, and continuously improves her circumstances. Perhaps never becoming “wealthy”, but achieving the best she is capable of.

Wealth can reduce the impact of bad choices, but cannot get good results from them. Poverty can restrict the good options available, but cannot eliminate all benefit from good choices,

Given that fact — that personal responsibility is not the sole factor in an individual’s wealth — do you stand by your suggestion that poor people can’t be trusted with money?

Also, when do you think these choices start to show dividends? They won’t leave university until they’re 21 (if they go). They’ll have to start at an entry-level job. They’ll be living as a poor person all this time.

I’m not saying that “poor people cannot be trusted with money”, I’m saying that their primary needs are things other than money; that is, cures for the reasons they don’t have enough money. If you give them money without those cures, then whatever those problems are will eventually expand to eat up all the money you give them and they are not better off, and possibly worse off, than before they were given the money.

Every choice you make has results, some immediate, some way out in the future. Critical, life changing choices are usually made well before University. How much effort you put into your schooling, the people you hang out with, your budgeting practices, your interpersonal skills, your decisions about how you adhere to laws and regulations, your diet and activity practices, your involvement with drugs, alcohol and sex, and so on.

Well, no. But now that I’ve read up on it, I’m not seeing socialism, government handouts or basic universal income as being so much as a spark.
How are you blaming universal basic income or wealth redistribution for that?

That means it should be avoided like the plague. Anyone who reads and comprehends the moronic philosophy of Karl Marx cannot escape that conclusion.

Socialism is THE most anti-human social-economic system in human history.

The reason is because value is determined by supply and demand. Supply and demand is THE fundament law of economics and socialism has always been a total failure because it denies that fundamental law.

But socialism is deadly for another reason. It dehumanizes anyone unfortunate enough to fall under its influence.

Whereas in the free market (capitalism) each person (laborer) is an asset. Under socialism each person is an expense to be minimized.

The free market unleashes human potential. Socialism enslaves human potential and kills it. We know that from what happened in the empire of the Soviet Socialist Republic and Mao’s Communist China.

Consequently, it is best for each human being to gain sufficient knowledge of himself to find out what he good at.

Then he can create wealth for himself and others by unleashing his talents in the free market which values him and will reward him with wealth.

A basic income provided by the government is an insult and demeans the human being.

Well, it’s not traditional socialism. It’s not the kind of socialism where the industries are publicly owned. (Which, if you’ve read El Manifesto Communista, you already know.)
It’s socialism is the weird new invention of the word, where the state gives benefits to the people. They are very different.

And, hell, if everyone demands Basic Universal Income (or, at least, enough), then it should be supplied…

I think (or at least hope) that the Donald was elected not because people thought he was right or thought he was the best choice for the job, but rather because he gave the impression of not being a politician. And many people realize that it is politicians who have universally screwed us up one side and down the other. The hope was and is that he might not do us as much harm as a politician would, and even if he does, it will be because the job is beyond him, not because he has evil intent.

We can quibble over whether that definition is simple. But, the important point is that it’s not socialism — not in the traditional sense (public ownership of industry) or the more recent hijacked definition (wealth redistribution or state-owned services, like Police services or benefits).

I agree, though, of course, they ARE the political landscape right now – the reprehensible morons, that is. They are the government, the Congress, the Supreme Court, the CEOs, and these two jokesters here.

Ok, lets get a little less enthralled with how it would feel good to do this, and .

How much would this universal income be? Switzerland is suggesting $2000 per month. Most of the other places suggesting it or trying it are less than half this, which is not really an “income”. I would say that anything less than $1600 (essentially “minimum wage”) would not have the benefits claimed. Plus, keep in mind this is always suggested as a REPLACEMENT for every other source of government assistance, so some people would be WORSE off..

Next, who would get it? What is the minimum age? Would there be any restrictions, for instance would someone in jail get it?

Knowing the details, we could see how many people in the country would be eligible, and multiplying it out, how that amount compare to the tax income for the country, and how it compares with the GDP. This will tell us if it is even possible.

The equation you want to do is a little naive. GDP changes if people gain more spending power. Companies want wealthy customers, and lots of them.
(My worry is high levels of inflation.)
But, okay, let’s talk about minor details; let’s assume we’ve agreed it’s going forward and try to figure out exactly what it should look like…
Should it replace all other benefits? Yes. Even if it makes some people worse off. Just for my reference, $1,600 is £1,240, which is nearly £15,000 per year — tax free. Excluding tax on that money, it’s equivalent to about £16,000 (a guess). That’s £32,000 for a family of two eligible adults (plus any actual salary they make — but now they can afford to go part time*). You can live on that; you can be secure on that. What sort of benefits should be higher than that?
But it does raise the two different ideas of equality (see here: goo.gl/1fvSqK). Is BUI simply a top-up for everyone earning less than a barrier, or is it a non-means tested provision? Difficult to say.
Are people in prison eligible? No. They’re already getting their food and rent covered; they’re in prison. Maybe we can consider a nominal payment so they have a small lump sum to set up when they leave — but maybe not.

When do you get it? Maybe there’s a dependent adult rate, which is lower.** Maybe, like the minimum wage (in the UK at least) maybe there should be a 16 – 18 rate, and an 18 – 20 rate, and a 20 – 25 rate and an over 25 rate.

What if people waste that money? To me, that’s the real question. I know my uncle would simply gamble it, and I know my grandma would convert it all to sherry. I know a friend of a friend who would convert it into payments on a car and phone she doesn’t need and another who would convert it to marijuana.*** That’s a legitimate concern. There’s always the possibility of making certain percentages of the BUI credits, that can only be spent on medicines, food, rent/mortgage and nappies (diapers). But credits have their own downsides.

*Enabling part time work is good. Start ups want part time workers because they can’t afford full time and there isn’t that much value to be added. It’s, I think, a better answer to the same question abolishing minimum wages answers.
** I mean adults still living with parents, but I don’t mean disabled people… I would need to work on the wording there. But I’m not a lawyer and I’m not training to be one.
*** Of course, we could always legalise marijuana and make an industry out of it — but it’s hard to tell whether the black economy related to marijuana is greater or smaller than the costs associated with enforcement, prison, and dodgey dealers who put user’s health at risk. I’d need to ask an economist. But neither you nor I am one.

Ah, but is it “tax free”? It is “income”, after all. In the U.S. Social Security is taxed if you have significant other income. If it is going to be “tax-free” then it should be called something else than “income”. Basic Citizenship Allowance maybe. We’re not giving it to those who are not citizens, right?

Personally, I think everyone should pay some tax. For some, it may not be a big amount, but a person who does not pay any tax is a person who does not realize that the money they want spent on them is money which is being taken from others. Which some or even many might not object to, but at least they need to realize that is what is happening, and share the pain of those paying a significant amount.

Good point about families. No more than two allowances per household. We don’t want to create a new class of “welfare queens” who pop out kids as quick as they can in order to get the “allowance” given for each.

We certainly don’t want welfare queens.
I did not know benefits could be taxed in the US. It, that makes sense: when you’ve got a lot of benefits and a possible earned income. Sounds expensive to administer, though. A BUI (maybe with a name change) does seem like an example of smaller government.

In the UK, no one earning less than £11,500 per annum ($15,000) pays income tax. I agree with this principle, even if I am unsure of exactly where the cut off should be. Taxing incomes that small will generate basically no money, but increase individual poverty.
(Plus, they pay VAT taxes.)

Of course “everybody” paying taxes will not significantly increase tax revenue. That is not the point. It is that a person who does not pay any tax is not a true participant in the system. Even if they intellectually understand that taxation is the source of their benefits, they don’t “know” the experience of having some of their hard earned money taken from them and being given to someone else. They are “children” under the care of “parents”; they are “peons” under the control of the “master”. Kept in line by the power of the purse. And governments are not stupid (in this respect anyway); by taking from the rich and giving to the poor, they maintain their power. If they took from the rich AND the poor, at least the poor would realize what is going on. That the benefits they receive are NOT free, and NOT something they are “entitled” to by reason of their mere existence, but rather help they are being given so that they can work to better themselves.

If everybody had to fork over 10% of their income, then perhaps there would be more interest in insuring the government would spend the people’s money wisely. Perhaps there would be less insistence on ever increasing handouts. Perhaps more people would “pay attention” to the activities being done in their names, and voting out the people who do the things they are opposed to..

People whine about the “rich” paying their “fair share”. I’m all for that – their fair share is the same percentage as everyone else. It is NOT fair that a person earning 10,000 pays nothing and a person who earns 10,000,000 pays 4,000,000. What is fair is the person earning 10,000 paying 1,000 and the person earning 10,000,000 paying 1,000,000.

Hmmm… I see the idea of taxation making people more involved participants. And I strongly support anything that can foster an involved electorate. But I’d need to see some evidence that taxation that increases pressure on the poor is a step in that direction.

There’s another conversation about “fair share”. I think it’s right that tax percentages are gradated; as you earn more you pay an increasing percentage.
(But I also believe in moderation. The Labour Party’s pledge, here in the UK to increase taxation on salaries over £80,000 above the 45% it’s already at is a bit much. Sure, if I earn £100,000 the increase is only on the £20,000 above the bracket, but it seems a bit much — but that’s quibbling over details, not principles.)

Means based “benefits”, particularly non-cash benefits, are not taxed and would be difficult to tax, since the people getting them allegedly don’t have enough to live on without them. Besides, when we are talking about things like housing and food, how do you valuate it in order to calculate tax? And how does one pay that tax; hand back some of the food? Cash money is a target for taxation, although again, means based payments imply it would be draconian to take back some of it.

In the case of Social Security, which is NOT means based (it is based on your age and how much you paid into the system, not how much you make when you get it), it does affect your taxes if you have significant income in addition to the Social Security payments. I am opposed to paying taxes on it, since it is not really “income”, but a return of some of the Social Security tax paid. BUI is also not means based, and frankly, I think it should be taxed, as it is truly income, and worse, provided without any sacrifice on the part of the recipient. Even if the taxes realized are not significant, the participation of the people in having to pay taxes is important for them to be true participants in the system.

It would be interesting to see if reduced stress can make realisable changes in productivity.

Look at this from the perspective of my country. The UK has low productivity. Productivity, in the long run, is what gets taxed — because it converts to business growth and salaries — so income tax and ‘business rates’ (I’m not sure what the US equivalent would be).
The relationship between stress and productivity is a complicated on, but one facet is this: high stress impedes decision making and motivation, which impedes productivity.

I’ve had a number of thoughts on this before. One of them was that benefits for the unemployed should be time-limited; the benefit in the UK is called ‘Job Seekers’ and if you don’t have a job in 12 months, I think the government can rightly doubt that you’re seeking a job… But it might not be the best step to the goal I think we should be aiming at (and I imagine you agree): increasing productivity and the opportunity for individuals to be productive.